A workplace dispute that simmered for years has moved toward resolution, as Costco Wholesale Corporation agreed to settle a lawsuit brought by a former distribution center worker who alleged retaliation after reporting sexual harassment.

The Costco Sex Harassment Suit deal was disclosed Wednesday in a joint notice filed in California federal court. Susanna Villalobos and the warehouse retailer informed the court they have reached an agreement in principle and intend to finalize the settlement and dismiss the case by Feb. 24.

Specific terms of the deal were not revealed.

Allegations of Harassment and Retaliation

Villalobos, who filed suit in 2023, alleged that the trouble began in 2021 when a male colleague repeatedly asked her out on dates. According to her complaint, each rejection was met not with acceptance, but with anger — including cursing and threats of physical harm.

The lawsuit claimed that when she reported the conduct to her supervisor, she was advised to simply avoid the co-worker, rather than seeing meaningful intervention. After what she described as a year of continued harassment, Villalobos said she escalated her concerns again.

This time, she alleged, the company’s response amounted to a “sham investigation.”

Instead of protection, Villalobos claimed she faced retaliation. Her suit alleged she was subjected to unnecessary drug testing and heightened scrutiny of her job performance — actions she framed as punitive rather than procedural.

Claims Under State Law and Health Concerns

The complaint asserted that the company failed to act in violation of California state law, which requires employers to address workplace sexual harassment and protect employees from retaliation.

Villalobos also contended that Costco failed to accommodate her hereditary angioedema, a medical condition that can trigger severe and potentially dangerous swelling episodes.

The case placed a spotlight not only on allegations of harassment but also on how employers respond when concerns are raised — and whether reporting misconduct becomes a risk in itself.

With the Costco Sex Harassment Suit deal now in motion, the parties appear poised to close the matter without further litigation. Neither side disclosed financial terms or additional conditions tied to the resolution.